FTX Alleges Former Lawyer of Aiding Sam Bankman-Fried’s Fraud, Silencing Whistleblowers

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Bankrupt cryptocurrency change FTX sued considered one of its former prime attorneys, accusing him of aiding fraud by firm founder Sam Bankman-Fried and silencing whistleblowers who reported wrongdoing on the firm.

The criticism, filed on Tuesday in US Chapter Courtroom in Delaware, describes Daniel Friedberg, a former chief compliance officer at FTX and common counsel of its associated crypto hedge fund Alameda Analysis, as a “fixer” for Bankman-Fried and different FTX executives who enabled the “wholesale raiding” of buyer funds.

Friedberg “whitewashed” complaints from staff elevating considerations concerning the actions of FTX and Alameda by settling claims for “inflated” quantities and in some circumstances hiring regulation corporations that represented whistleblowers to carry out authorized work for FTX, the corporate mentioned.

The settlement quantities are redacted within the criticism.

A lawyer for Friedberg and a spokesperson for FTX didn’t instantly reply to requests for remark.

The lawsuit accuses Friedberg of authorized malpractice and breach of his fiduciary obligation. It seeks to claw again “tens of tens of millions” value of cryptocurrency Friedberg acquired whereas working for FTX, alongside along with his compensation and $3 million (roughly Rs. 24 crore) in bonuses.

FTX filed for chapter in November 2022 after a run on buyer deposits. The corporate’s new management has accused Bankman-Fried and his associates of widespread failures to implement company controls.

Bankman-Fried has been criminally charged in federal court docket in Manhattan with stealing billions in FTX buyer funds to plug holes on the Alameda hedge fund and fund speculative investments. Bankman-Fried has pleaded not responsible and denied stealing funds.

At the very least three different FTX executives have pleaded responsible to US fees.

Friedberg has cooperated with US investigations into the FTX collapse, Reuters has reported.

Friedberg served as an advisor to Bankman-Fried and his firms whereas working on the regulation agency Fenwick & West. He grew to become an in-house legal professional at each FTX and Alameda in 2020.

© Thomson Reuters 2023

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